Tuesday, March 21

Facebook stock tumbles as inflation and supply chain issues dampen Q4 earnings

Meta has reported disappointing earnings, offered weak guidance, and said user growth has stagnated, which led Facebook shares to fall by more than 20% in extended trading on Wednesday.

  • Meta Q4 revenue of $33.67 billion versus $33.4 billion expected.
  • StreetAccount: Daily Active Users (DAUs): 1.93 billion vs. 1.95 billion expected by analysts.

The recently renamed company, Meta, issued disappointing first-quarter guidance, along with disappointing numbers for the fourth quarter.

In the first quarter, Facebook expects revenues of $27 billion to $29 billion, compared with analysts’ expectations of $30.15 billion, according to Refinitiv. The company’s revenues are expected to grow between 3% and 11%.

In addition to privacy changes in Apple’s iOS, Facebook is also struggling with macroeconomic challenges. Inflation and supply chain issues are affecting advertising budgets, according to the report.

Furthermore, the company is shifting its focus to products that do not generate the same amount of revenue as its core news feed. For example, the company’s Reels videos are gaining more popularity.

“Our impressions will be impacted by both increased competition for consumers’ time and a shift toward engaging with video in our apps, which monetizes at lower rates than Feed and Stories,” Facebook said.

The report is the first from Facebook since its parent company changed its name to Meta, which refers to the metaverse. Mark Zuckerberg announced the name change in October, following a series of troubling reports about the company resulting from documents leaked by a former employee to journalists, lawmakers, and the SEC.

A new reporting structure comes along with the name change to Meta. Facebook said it is breaking out its hardware division, Facebook Reality Labs, into its own division in its last earnings report. Facebook’s Family of Apps (FoA), which includes Instagram, Messenger, and WhatsApp, will form its core business.

The fourth quarter revenue of Meta’s Family of Apps was $32.79 billion and operating income was $15.89 billion. During the quarter, its Reality Labs segment generated $877 million in revenue and posted a $3.3 billion loss.

Twitter, Snap and Pinterest all experienced declines in extended trading on Wednesday following Facebook owner Meta Platforms’ fourth-quarter earnings announcement, which sent the stock down 22%.

Snap’s shares dropped more than 18% after hours. Pinterest shares fell almost 10%, while Twitter shares fell almost 8%.